Shares of platinum group metals (PGM) miners rallied last week after the World Platinum Investment Council forecast a deeper than expected global platinum deficit in its latest quarterly report.
The council expects the global supply of platinum to continue falling this year on weaker recycling supply and lower output from SA’s PGM mines. While demand is also expected to decline, the dwindling supply will result in a global platinum deficit of over 840,000 ounces, the group said.
This marks the third consecutive year of platinum deficits, with above-ground stocks of the metal falling to only four months’ worth of cover as a result. Above ground stocks decreased by 23% last year and are expected to fall by 25% in 2025.
This resulted in growing investment demand for the precious metal towards the end of last year, with investment inflows picking up dramatically in the final quarter.
World Platinum Investment Council director Edward Sterck said investors view the rapid depletion of above ground stocks as “an unsustainable situation, which should reflect in pricing”.
Since the start of the year, the price of platinum has gained about 8%, with the JSE’s largest PGM miners reaping the benefits.
Shares in Anglo American Platinum and Sibanye-Stillwater gained more than 17% in the past seven days, while Northam Platinum and Impala Platinum were up by 27% and 29%, respectively.
The flurry of investment also saw the JSE precious metals and mining index up more than 17% last week, its largest weekly gain since October 2023.
Despite the uptick in investment, mounting geopolitical and economic uncertainty have added pressure to platinum’s demand outlook.
Trade restrictions and tariffs threatened by US President Donald Trump may disrupt global trade flows, with the added inflationary pressures weighing on consumers’ purchasing power and, in turn, pushing down the demand for platinum.
The highly integrated North American automotive industry is particularly vulnerable to demand risk, Sterck said.
However, “the cumulative scale of the three years of sequential market imbalances means that deficits are fundamentally structural in nature and have depleted above ground stocks by over 2.6-million ounces.
“Indeed, on our current assumptions, the worst-case downside risks to 2025 demand posed by tariffs and other disruptions will be insufficient to make a significant reduction to the deficit, which will remain embedded,” Sterck said.
This year, the World Platinum Investment Council predicts that the world’s supply of platinum will drop by 4% year on year to about 7-million ounces, while demand is projected to fall by 5%.
Persistently low PGM prices saw some of SA’s largest PGM mining companies implementing significant restructurings last year, with output from the domestic PGM sector down 7.1% year on year in December.
Amplats reported a drop in refined volumes in its latest annual results, while Sibanye-Stillwater announced a 50% decline in production from its Stillwater mine.
The World Platinum Investment Council said this year’s structural deficit “will not resolve itself without a price response”, as the platinum market looks to solve the imbalance by stimulating a supply response or disincentivising demand.
The group said it believes “both supply and demand are relatively price inelastic, at least in the near-term, and this presents an attractive investment opportunity”.
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